In February 2019, the CBIRC released
supervisory statistics of the banking sector in the fourth quarter of 2018.

Banking assets and
liabilities increased steadily. As of the end of 2018 Q4, total RMB and
foreign currency assets of China’s banking institutions at home and abroad reached
RMB 268 trillion, up by 6.3% year on year. Among those, assets of large
commercial banks registered RMB 98 trillion, accounting for 36.7% of the total,
and up by 6.0% year on year. Assets of joint-stock commercial banks reached RMB
47 trillion, accounting for 17.5% of the total, up by 4.6% year on year.

As of the end of 2018 Q4, total, RMB and
foreign currency liabilities of banking institutions at home and abroad reached
RMB 247 trillion, an increase of 5.9% year on year. Among those, liabilities of
large commercial banks registered RMB 90 trillion, taking up 36.7% of the
total, up by 5.6% year on year. Liabilities of joint-stock commercial banks
were RMB 44 trillion, accounting for 17.7% of the total, and up by 4.0% year on
year.

The
banking sector continued to strengthen financial services. As of
the end of 2018 Q4, the agriculture-related loan (excluding bill financing)
balance of banking institutions reached RMB 33 trillion, up by 5.6% year on
year. The balance of outstanding loans to MSEs (including MSE loans, individual
business owner loans and MSE owner loans) reached RMB 33.5 trillion, in which
the outstanding balance of MSE loans for inclusive financing purpose with
single credit amount not exceeding RMB 10 million reached RMB 9.4 trillion, up
by 21.8% year on year. Loans to credit card consumption and
government-subsidized housing projects increased by 25.2% and 32.7%
respectively, which are 13.1 and 20.6 percentage points higher respectively
than the average loan growth.

Credit quality remained
stable. As of the end of 2018 Q4, outstanding balance of NPLs of
commercial banks was RMB 2.03 trillion, down by RMB 6.8 billion compared with
the end of the previous quarter. NPL ratio of commercial banks was 1.83%, down
by 0.04 percentage point compared with the end of the previous quarter.

As of the end of 2018 Q4, the
balance of outstanding performing loans of commercial banks was RMB 108.5
trillion, among which, the balance of normal loans was RMB 105 trillion and the
balance of special-mentioned loans was RMB 3.5 trillion.

Profit growth was
generally steady. As of the end of2018 Q4, the accumulated net profits of
commercial banks of the year were RMB 1830.2 billion, up by 4.72% year on year,
with the growth rate down by 1.26 percentage points year on year. The average
ROA of commercial banks of the fourth quarter of 2018 was 0.90%, down by 0.10
percentage point compared with the end of the previous quarter. The average ROE
was 11.73%, down by 1.42 percentage pointscompared with the end of the previous
quarter.

Risk resilience was
strong. As of the end of 2018 Q4, the balance of loan loss
provisions of commercial banks reached RMB 3.77 trillion, increased by RMB
100.6 billion compared with the end of the previous quarter; the provision
coverage ratio was 186.31%, up by 5.58 percentage points compared with the end
of the previous quarter; and loan provision ratio was 3.41%, up by 0.03
percentage point compared with the end of the previous quarter.

As of the end of2018 Q4, the core
tier 1 capital adequacy ratio (CAR) of commercial banks (excluding branches of
foreign banks) was 11.03%, up by 0.24 percentage point compared with the end of
the previous quarter; the tier 1 CAR was 11.58%, up by 0.25 percentage point
compared with the end of the previous quarter; the CAR was 14.20%, up by 0.38
percentage point compared with the end of the previous quarter.

Liquidity
remained sound. As of the end of 2018 Q4, the liquidity ratio of
commercial banks was 55.31%, up by 2.37 percentage points compared with the end
of the previous quarter; RMB excess reserve ratio was 2.64%, up by 0.75
percentage point compared with the end of the previous quarter; the loan-to-deposit
ratio (RMB-denominated, domestic) was 74.34%, up by 0.79 percentage point
compared with the end of the previous quarter.